Global Events Shake the Gold Market

All eyes are on the United States now that Donald Trump has been sworn in as the 45th President, but it is important for investors to keep an eye on other events around the world as well. Putting it all together can help investors, as well as potential investors, make decisions about how to handle the gold holdings in their portfolio.

United States Presidential Inauguration

In the United States, the new president has some big promises to deliver upon. He has promised to correct the economy, thus far offering little in the way of specifics. This where things get a bit dicey for people who have invested in gold. On the one hand, a stronger economy in the U.S. could mean an increase in construction. This would boost gold prices. On the other hand, a stronger economy means that the dollar will strengthen. This can have a negative impact on gold.

Asian Traders

Obviously, investors are waiting eagerly to see what is going to happen. For the first time since President Trump’s election in November 2016, Asian traders have shown a marked reaction to his election. The Asian market is likely going to be up and down for the foreseeable future until it is known how President Trump’s desire to put his country’s interests first will impact global relations.

The stock markets in this area are showing an initial positive reaction to world events, so it will be interesting to see how Asian investors react when they interact with the gold market. Taiwan’s Taiex market recently closed at a record high since 2015. The Shanghai Composite was up 0.6 percent and the Hang Seng is up 0.7 percent.

London Metal Exchange

The London Metal Exchange is having some difficulties right now because of rising costs and fears that the market isn’t as flexible as it should be. The Libor scandal is one of the primary factors that is coming into the picture in London. The lawsuit from the United States will be something to keep an eye on because it is based on allegations that the City of London was rigging prices for bullion. In response to the allegations, steps have been taken to offer more transparency to the pricing curves.

As of Jan. 23, 2017, the price of gold is $1,217.76 per ounce. This is certainly a step in the right direction.

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